Part of the shortfall in the numbers could come from the fact that Apple misjudged demand for the budget iPhone 5C. During the company’s earnings call this afternoon, Apple CEO Tim Cook admitted, “It was the first time we ever ran that play, and demand percentage turned out to be different than we thought.”

iPhone 5C

In this case, many customers weren’t too impressed with the “new” iPhone 5C and had no problems forking over an extra $100 to step into a more advanced iPhone 5S. "The mix was stronger to the 5S, and it took us some amount of time to build the mix that customers were demanding.”

Apple’s strategy with the iPhone 5C was slightly different than in years past. Before the iPhone 5C, Apple would traditionally introduce a brand new generation of iPhone at the $199 price point (on contract), and simply discount the previous generation model to $99 (on contract).

iPhone 5S

However, with the launch of the iPhone 5S, Apple took things a step further. Apple discontinued the previous generation iPhone 5 and introduced the iPhone 5C, which was essentially the iPhone 5 in a candy-coated plastic shell. Apple hoped that the colorful plastic shell would distract customers from the fact that this was just a warmed over iPhone 5.

In fact, Apple was so confident in its ability to “read” its customers that when the iPhone 5C and iPhone 5S were launched last year, it was the cheaper iPhone 5C that got the most prominent real estate on Apple’s website and the bulk of Apple’s attention in TV spots.

As for why he thinks customers are actually flocking to the iPhone 5S instead, Cook says it’s because of Touch ID. “It's a major feature that has excited people. And I think that, associated with the other things that are unique to the 5S, got the 5S to have a significant amount more attention and a higher mix of sales."

quote: Kind of like the Microsoft Windows that comes "free" on every new computer. "It's still overpriced".

Yup kinda like how you can pay twice as much for a computer that has the exactly same internals, for twice as much because it has mac OS...and realize that most software doesn't work and have to buy virtual Windows anyways.....LOLOLOLOLOL

Microsoft is one of the leading contributors to the Linux kernel. Microsoft has numerous open source projects. Additionally, they in no way, shape or form limit anyone from running anything the could ever want on a Windows system. Nor do they prevent their OS from being loaded on whatever hardware you'd like. Sure, you pay for it. But it's better than dealing with people like you on a forum when you have a problem.

Heck, I'd pay you $200 if you never logged into this site again. And I'd get the better of that deal.

Lol, what? No they're not. I don't know who is feeding you your information, but time to find some more reliable sources." Additionally, they in no way, shape or form limit anyone from running anything the could ever want on a Windows system."

A couple things wrong with this statement. Namely the last two words "Windows System". Microsoft uses closed proprietary protocols, closed proprietary API's, and closed proprietary file formats (Office) to lock you into their ecosystem. They've always done this. Anti-consumer and anti-competitive behavior is what this is called. But you'll continue to take it up the butt and smile like a good Wintard, won't you.

Lets put it another way: "Apple in no way shape or form limits anyone from running any Apple software on an Apple system". See what I did there?" Nor do they prevent their OS from being loaded on whatever hardware you'd like."

Wrong again. You probably haven't heard of the TPM trusted platform module, or the UEFI encryption keys that lock your hardware to your OS. On top of that, when you're stuck using a Windows OS, you're stuck using only the hardware that the OS supports - Try using your graphics card from 2003 on a Windows 8 PC. It probably won't work due to driver incompatibility. Linux doesn't have this problem.

"Sure, you pay for it. But it's better than dealing with people like you on a forum when you have a problem."

I'm not sure what your point is here, aside from being a troll comment. Whether you choose Microsoft or Apple or Linux, all three have paid support options, and all three have internet forum support options.

"Heck, I'd pay you $200 if you never logged into this site again. And I'd get the better of that deal. "

Don't shoot the messenger. I only speak the truth. You've got to remove those Redmond Wintard goggles if you want to see clearly.

No, pretty much always. Only in the USA do people (sheeple?) "pay" only $100 for a $600 phone, then ignore the fact that they wind up paying $1,500+ extra over the next two years than if they had just bought a new ($600) or year-old ($200) phone and just paid for usage.

We switched all three of our smartphones over to Ting from Sprint a few months back; monthly bill is half what it once was.

While I agree with you in principle, if the only service that has reliable, fast service where you live and work charges the same whether you pay for your phone outright, or get it on contract, then there is a difference.

Sprint and Tmobile suck where I live, and ATT, Verizon, and USCC are all pretty much the same price, although ATT seems to be starting to respond to TMobile's changes.

I've ran the analysis before and I figured out that if I buy the device outright and then go to a $35/month plan (no data), the payoff period between that and putting it on a contract for a $85/month plan is like 11 or 12 months.

And over the course of 4 years, I end up SAVING over $1000 because I don't have to pay as much for the monthly plan.

I literally just went from contracts and high-end Android smartphones to pay-as-you-go and a Lumia 620, so my perspective may be skewed, but I think that if Apple doesn't get a phone into $300-$400 territory new and off-contract, they're going to get their butts handed to them in the long run. I'm aware that they want to project a "premium" image, but there's a not-so-fine line between premium and niche...